January 6, 2007

Democratic leaders this week vowed to make the alternative minimum tax a centerpiece of next year's budget debate, saying the levy threatens to unfairly increase tax bills for millions of middle-class families by the end of the decade.

The House voted on Friday to pull the shadowy tradition of Congressional earmarking into the daylight, requiring lawmakers to attach their names to the pet items they slip into spending or tax bills and certify that they have no financial interest in the provisions....

The vote on the new earmark measure was linked to a rule known as “pay as you go” that would prohibit the House from increasing the deficit by passing any new tax cuts or entitlement spending programs without offsetting them with spending cuts or tax increases....

[T]he rules will make it more difficult to repair the alternative minimum tax, which, thanks to inflation, penalizes millions of middle-class households as well as its original targets, the rich. Repairing the tax is estimated to cost as much as $1 trillion in lost revenue over 10 years.

Of course, I support reforming the earmarks procedure. But they just took away the tax cut they promised! The earmarks change is supposed to leave more money in the budget, so why does it provide the occasion for reneging on the AMT promise?

34 comments:

Earmarks are bad and need to be held up to scrutiny. The Democrats are not going to be satisfied until they raise taxes, slow the economy, reverse the stock market, and increase the minimum wage at the expense of job creation.

The Democrats simply believe that the local yokels, you and me, should be creating wealth for everyone else and not ourselves. It is European socialism designed to reasign wealth away from individual saving and investment to big-government dependency.

It is a doomed policy based on doom-and-gloom reporting that flies in the face of accurate reporting. Would I-pods and other luxury goods be flying out the door if wealth creation was not predominant in our economy?!

The Democrats are not going to be satisfied until they raise taxes, slow the economy, reverse the stock market, and increase the minimum wage at the expense of job creation.

Yes, the economy during the last Democratic Administration was very anemic.

I don't see why the Congress can't Pay as You Go by cutting. Of course, I do think Bush's (and the Republican Congress's) outrageously profligate spending in the past 4 years all but guarantees a massive tax increase in the future. I'm sure all the Republicans who were quiet during the past 4 years will be howling like banshees if it is the Democratic Party that happens to be in power when that step towards fiscal sanity is taken. Is there any reason at all to listen to those heretofore silent Republicans then?

This is incorrect. Passing "pay as you go" merely ensures that new tax cuts or spending is offset by corresponding spending cuts or tax increases. As they have not yet abandoned the notion of reforming the AMT, you can't possible characterize this as "reneging" on the promise.

In the next paragraph of the article, Rangel is quoted as saying he is "determined" to find the money to fix the AMT under pay as you go.

Now, maybe he will and maybe he won't, but as the subject here is promises, so far there's been no change to the promised reform, only a mechanism to prevent that reform from further exploding the deficit.

Cynical Prediction: Earmarks will not decline. Other methods to disguise them will be used. This will not receive widespread press attention even after it becomes obvious how it is being done.

I think I'm already on record somewhere as predicting that AMT reform would not happen. (Please shoot the first GOP sympathizer who says "What do you expect from a Democratic Congress?" after reminding them that the Republicans sat on their hands about this issue for twelve long years because they wanted the money.

"Is there any reason at all to listen to those heretofore silent Republicans then?"

I can now refer to this comment as proof that you do not read anyone in the conservative blogosphere. The right has been up in arms over out of control spending and it is a primary reason why Republicans lost Congress. Lots of righties were even saying, "Hell, I want the Democrats to win. It will teach the Republicans a lesson and the Dems can't spend any more than the 'conservatives' have." Whatever may be going on with Bush and the Republican leadership the conservative base has been raising holy hell.

MadisonMan said... "I don't see why the Congress can't Pay as You Go by cutting."

I think Democrats and Republicans can both agree with PAYGO in principle, but as you allude to, the Dems tend to see PAYGO as requiring tax increases and the GOP tends to see it as requiring spending cuts.

Obviously many of the commentors aren't big on reading and plan to whine their way through the next 2 years, "Look the Democrats are just as bad as us." You would think that they would learn from their "Jamal Hussein" humiliation about right-wing triumphalism, but it seems unlikely.

All Pay as you go does is make it more difficult, not impossible at all to deal with ATM. No one has reneged on anything despite excessive level of whining and cries of hypocrisy. And Second, I guess the right-wing has adopted wholesale Kaus's "Feiler Faster" principle to apply to the Dems. I mean already 48 hours in and they've already lost faith after being so "willing to give the Dems a chance".

Professor Althouse wrote:The House voted on Friday to pull the shadowy tradition of Congressional earmarking into the daylight, requiring lawmakers to attach their names to the pet items they slip into spending or tax bills and certify that they have no financial interest in the provisions....

FFS, and where is the downside to this? Let's be entirely cynical here for a moment: It's less than two years until the '08 general election, and whatever else you say about Pelosi and Reed, they can count. Why the hell wouldn't you want your name all over the earmarks that will bring home the bacon and other pork products to your district?

The good thing of getting rid of the earmarks is that there should not be any items not paid for. The bad thing is that by leaving the AMT in place the dems now have free rein to spend spend spend. They will start the programs as usual and then the programs will grow and grow and grow. Then we will hear how necessary the programs are and how much the poor need them so they will have to raise taxes to pay for them. The end result will be increased taxes and increased nanny state government and we will be told is all for a good cause so suck it up and take it. The dems have been doing this since before the Great Society - nothing new at all.

The AMT costs $100 million a year. Earmarks cost $64 million a year. Eliminate earmarks and you only have $36 million a year to come up with. That can be done rather easily by removing subsidies for energy companies or farm subsidies.

jaed said... "This choice of words fascinates me: penalizes millions of middle-class households as well as its original targets, the rich. but I'm not sure whether I'm fascinated that the NYT believes the purpose of the AMT is to penalize rich people for being rich - or whether I'm fascinated that they openly admit this is the purpose."

The AMT was a liberal idea to hose the rich, and as usual, when the goal is to hose the rich, the middle class usually get soaked too. Whenever you hear a Democrat talking about abolishing the AMT, here's what they're actually saying: "this was our idea, but we were wrong."

downtownlad said... "Who said they aren't going to get rid of the AMT? I was reading an article yesterday and Charlie Rangle said that they will find a way to pay for this tax cut"

This is the same Rangel who said the other day that Democrats were willing to compromise with business: they'd give business the immigration reforms they wanted if business basically stayed out of all the anti-business measures the Democrats are cooking up. I love that: as a "compromise," to seem reasonable when you ask business to support something that'll hurt business, you offer to do something you already want to do and hope that no one notices how full of sh*t you are.

We know exactly what the Democrats intend to do: they're going to pick up exactly where they left off on December 1st 1994. They see this of a long-overdue restoration of their natural right to rule. Don't expect surprises.

Simon said . . . I think Democrats and Republicans can both agree with PAYGO in principle, but as you allude to, the Dems tend to see PAYGO as requiring tax increases and the GOP tends to see it as requiring spending cuts.

That paints the Republicans in an awfully favorable light. What, in the past 6 years, can you offer to support the proposition that any Republican agrees with PAYGO in principle? Even setting aside offsets for the tax cuts, I'd be particularly interested in the required spending cuts that they pursued to offset new spending on ag subisidies, NCLB, and Medicare Part D. Please let me know.

Dems can be derided as being "tax and spend liberals". At least they are more honest and responsible. They want a big government. They get big government. They realize that taxes are what pays for big government.

The current (at least last 6 years) Republicans deride big government out of one side of their mouths but what they actually do is expand government. Worse still, they don't believe (or at least can't bring themselves to fashion policies consistent with the notion) that large structural deficits are a bad thing. If Republicans had the stones to tell farmers (i.e. ag subisidies), suburban voters (e.g NoChildLeftBehind) or seniors (e.g. Medicare Part D) that fiscal responsibility was more important than whoring their principles for votes, I'd vote for Republicans. Until then, I'll vote for democrats. At least that way my kids and grandkids won't be paying as much for the big federal government I don't really want.

FFS, and where is the downside to this? Let's be entirely cynical here for a moment: It's less than two years until the '08 general election, and whatever else you say about Pelosi and Reed, they can count. Why the hell wouldn't you want your name all over the earmarks that will bring home the bacon and other pork products to your district?

Good point, this seems like a smokescreen in lieu of any meaningful earmark reform. The problem with earmarks is not that we don’t find out who does them – the whole point of earmarks is to curry favor with the folks back home in which case the names will soon appear in on their websites and letters to their constituents– it’s that a lot of programs that ought to be paid for by the people who use them (read the local and State level) are being paid for at the federal level which destroys any incentive to control spending. IMO the only way to get a handle on this is to cut spending and cut taxes and keep the money at the local and State level. That way is the citizens of Utah or New York want to build a new bridge or road, they can pony up their own dough and we’ll find out how “valuable” it really is.

ahhh all the little small brain neo-cons whinning about the sunset of the Bush giveaway...so nice that all of you congregate in one spot. must be a full moon.

1. never, ever, in history have tax cuts reduced the deficit. NEVER. 2. if the deficit now weren't smoke and mirrors with 200 billion or so "off balance sheet" the problem would knock your socks off instead of just your shoes.3. if the economy is soooo great, why are people living off their home equity? wages, except for the uberwealthy, are just past stagnant, the stock market from 2000 to present represets keeping up with inflation, and our saving rate and personal debt prove it4. you idiots scream about tax and spend democrats without any evidence that this is true...this mess is the republican doing and not to call it a mess is putting lipstick on a pig.

the sooner the grownups are in control around here the better off you spendthrift children will be.

Why is it that most of the countries at the top of the Quality of Life index have tax burdens much greater than ours? Is there a correlation between our government's abandonment of its public healthcare role and our having an infant mortality rate just above some third-world countries? Why are over 45 million Americans going without healthcare? Why has the average lifespan for American males decreased over the past 30 years? Why do we have the most modern, high-tech military weapon systems in the world? It’s because we spend billions to be the best – that’s why. It’s important to us. Once we’ve pissed away our retirement savings paying for our children’s’ catastrophic healthcare bills, maybe then we’ll pay as much attention to healthcare as we now do to national defense.

Is there a correlation between our government's abandonment of its public healthcare role and our having an infant mortality rate just above some third-world countries? Why are over 45 million Americans going without healthcare? Why has the average lifespan for American males decreased over the past 30 years?

1) Military spending as a percentage of GNP is at a post WW II low. In fact a very strong argument can be made that we are not spending enough on our military.

Why is it that most of the countries at the top of the Quality of Life index have tax burdens much greater than ours?I think it more interesting to look at the demographics, and what it bodes for these utopias.

I view the "Pay as you Go" scheme extremly insidious and likely to raise taxes without actually curbing the deficit.

Anyway, despite the fact that a deficit is not as crippling on the economy as high taxes, I'd rather see a 'Cut as you Go' scheme, where if Gov't wants to increase spending in one area, they cut spending in another. No tax increase silliness.